CMC Markets Weekly Report
Stocks in the U.S. ended near session lows in light volume trading Friday, dragged by techs, as investors remained on the sidelines ahead of the weekend amid ongoing worries over the looming "fiscal cliff."
Stocks in the U.S. ended near session lows in light volume trading Friday, dragged by techs, as investors remained on the sidelines ahead of the weekend amid ongoing worries over the looming "fiscal cliff."
The Dow Jones Industrial Average declined for a third session, sliding 35.71 points, or 0.27 percent, to close at 13,135.01, the S&P500 dropped 5.87 points, or 0.41, to end at 1,413.58 whilst the Nasdaq fell 20.83 points, or 0.70 percent, to finish at 2,971.33.
Apple fell nearly 4 percent after UBS cut its target price on the tech giant to $700 from $780, citing signs that the iPhone's production rate is declining and adding that iPhone 5 sales in China may not do as well as the previous model. The iPhone 5 debuted in China Friday.
Apple posted its second-straight week in negative territory, plunging nearly 27 percent over the period.
Ongoing "fiscal cliff" discussions have kept investors cautious over the last few weeks. Most recently, President Barack Obama and Republican House Speaker John Boehner met at the White House late Thursday to discuss how to resolve the looming economic problems.
The meeting came shortly after Boehner accused Obama of dragging out negotiations.
On the economic front, consumer prices slipped 0.3 percent in November for the first time in six months, according to the Labor Department. Economists had expected a decline of 0.2 percent.
Meanwhile, industrial production jumped 1.1 percent in November, posting its biggest gain in nearly two years, according to the Federal Reserve, topping expectations for a gain of 0.3 percent.
Manufacturing growth in China hit a 14-month high in December, according to the latest HSBC flash PMI report, with gains in sectors including new orders and employment highlighting a rosier outlook for the economy in months to come.
Major currencies eased against the US dollar on Friday but closed US trade off their highs. The Euro lifted from US$1.3070 to US$1.3175, and was around US$1.3160 at the US close. The Aussie dollar lifted from lows near to US105.60c and the Japanese yen lifted from 83.92 yen per US dollar to JPY83.47 at the end of the US afternoon session.
World crude oil prices rose on Friday in response to solid economic data in the US and China. Brent crude rose by US$1.24 or 1.1 percent to US$107.91 and Nymex crude rose by US84c or 1.0 percent to US$86.73 a barrel. Over the week Brent rose by 2.0 percent and Nymex rose by 0.9 percent.
Base metal prices were mixed on the London Metals Exchange on Friday. Copper lost 0.1 percent and lead fell by 0.2 percent but other metals rose up to 1.0 percent. Over the week metals rose up to 6.4 percent (tin) with copper up just 0.4 percent. The gold price rose slightly on Friday with the Comex gold futures price up 20c to US$1,697.00 per ounce. Over the week gold fell by 0.5 percent. But the spot iron ore price rose by $2.90 or 2.2 percent to fresh 5-month highs of US$129.30 a tonne.
Making news this week we can expect the minutes of the RBA's December board meeting on Tuesday along with the Conference Board leading index for October. On Wednesday, the Westpac leading index for October and DEWR internet skilled vacancies for November, while on Thursday, RBA foreign exchange transactions for November.
In the U.S, the economic calendar kicks off on Wednesday with housing starts for November. Thursday will we'll see GDP for Q3, jobless claims for the week of 15 December, existing home sales for November and the Philadelphia Fed survey. Friday rounds off the week with durable goods orders for November, personal income and outlays for November.
Frequently Asked Questions about this Article…
U.S. shares slid into the close as techs weakened and investors stayed on the sidelines ahead of the looming "fiscal cliff." The Dow, S&P 500 and Nasdaq all fell (the Dow down about 0.27%, the S&P 0.41%, and the Nasdaq 0.70%), reflecting short‑term caution rather than broad panic.
Apple fell nearly 4% after UBS cut its price target from $780 to $700, citing signs of a slowing iPhone production rate and concerns that iPhone 5 sales in China may underperform prior models. Apple also posted a second straight down week, plunging nearly 27% over the period — a reminder to watch company‑specific catalysts like analyst revisions and product rollout updates.
Consumer prices slipped 0.3% in November — the first decline in six months and a bit worse than the expected 0.2% fall — while industrial production jumped 1.1% in November, its biggest gain in nearly two years and well above the 0.3% forecast. Those mixed signals can create volatility as investors weigh disinflationary pressures against stronger production.
HSBC’s flash PMI showed China’s manufacturing growth hit a 14‑month high in December, with gains in new orders and employment. That stronger China data supports demand for commodities and global growth expectations, which can lift resource stocks and commodity prices.
Major currencies generally eased against the U.S. dollar — the euro rose from about US$1.3070 to US$1.3175, the Aussie dollar lifted from lows near US105.60c, and the yen strengthened to JPY83.47 per USD. Oil rose (Brent to US$107.91, Nymex to US$86.73) after solid U.S. and China data. Metals were mixed, gold futures edged up to about US$1,697/oz, and spot iron ore hit five‑month highs at US$129.30/tonne — all useful indicators for investors with exposure to FX or commodities.
The "fiscal cliff" refers to looming U.S. fiscal policy decisions discussed by President Obama and House Speaker John Boehner; their talks have kept investors cautious. Ongoing uncertainty around those negotiations has contributed to the market's risk‑off posture and lighter trading volumes.
In Australia expect the RBA’s December meeting minutes (Tuesday), the Conference Board leading index for October, Westpac leading index (Wednesday), DEWR internet skilled vacancies (Wednesday) and RBA foreign exchange transactions (Thursday). In the U.S. watch housing starts (Wednesday), Q3 GDP, weekly jobless claims, existing home sales and the Philadelphia Fed survey (Thursday), and durable goods orders plus personal income and outlays (Friday).
Given the mix of weaker CPI, stronger industrial production and geopolitical/fiscal uncertainty, keep a clear plan: review your time horizon, diversification and risk tolerance, monitor key data and corporate news (like Apple’s iPhone updates), and avoid making impulsive moves based solely on one week of market noise.
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